Why circular economy is interesting for businesses in Europe?


For long, manufacturing companies have faced increasing cost-competition globally creating pressure to renew industries. Environmental policies in the EU are its other drivers. Yet, further improvement in resource and energy efficiency coupled with new business models is likely to become increasingly important for manufacturing. Thus, circular economy has gained growing attention. A recent event organised by the Finnish Innovation Fund Sitra gained 600 participants to a one day occasion.

Circular economy refers to closing material loops reducing pressure on virgin natural resources and to extending the use time of products and materials, thereby decreasing energy use, pollution and waste. Last year the EU adopted a circular economy (CE) strategy. It is currently being debated delaying efforts to promote innovation related to circular economy.

    Paula                    Armi                  Riina   
    Kivimaa                 Temmes              Antikainen









Circular economy has potentially wide-reaching benefits (Figure adapted from SYKE Policy Brief "Towards a carbon neutral circular economy")

Circular economy holds economic and environmental promises for businesses. Frontrunners in product design and new frugal business models can benefit. Totally new types of and more intangible business models are expected to bring growth opportunities for Europe. The EU Communication on Circular Economy estimated a potential boost for EU GDP by up to 3.9%. Earlier, Ellen MacArthur Foundation valued the global economic benefit to US $2 trillion. In Finland, economic benefits are estimated by Sitra to reach € 1.5-2.5 billion, while in the UK 500,000 new jobs have been envisaged. To reach this potential, it is crucial to understand that circular economy is not just about improving resource efficiency and waste management, but a more fundamental change in how we think about business, economy and services offered to consumers. New actors and networks are already emerging in the context of circular economy, including the Dutch Circle Economy cooperative and Mahdoton community in Finland.

Circular economy also means that the available primary natural resources in each region condition industrial renewal less than before. By adjusting processes of product design, manufacturing and logistics to global material cycles, and increasingly reusing materials and remanufacturing products, the geography of resources becomes less relevant. This is important for Europe, where natural resources are not abundant.

Paula Kivimaa, Armi Temmes, and Riina Antikainen

The authors are members of a Tekes-funded project examining circular bioeconomy in the context of manufacturing industries: www.syke.fi/projects/recibi

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